Problem 5
Miller Toy Company manufactures a plastic swimming pool at its Westwood Plant. The plant has been experiencing problems as shown by its June contribution format income statement below:
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Janet Dunn, who has just been appointed general manager of the Westwood Plant, has been given instructions to “get things under control.” Upon reviewing the plant’s income statement, Ms. Dunn has concluded that the major problem lies in the variable cost of goods sold. She has been provided with the following standard cost per swimming pool:
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Ms. Dunn has determined that during June the plant produced 6,000 pools and incurred the following costs:
It is the company’s policy to close all variances to cost of goods sold on a monthly basis.
Required
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